Commercial Liability Insurance or Commercial General Liability Insurance (CGL) is an insurance policy that covers claims from third parties against your business for bodily injuries or property damage due to negligence or unforeseen accidents.
If your business is sued, CGL insurance will cover compensatory damages awarded against your business and any costs associated with the suit.
Just like any other business, insurance coverage for contractors is necessary. Contractors can also be sued and held liable for customer injuries, property damage, or advertising injuries.
To protect your investment and mitigate financial risks associated with unexpected occurrences and costly lawsuits, you need commercial liability insurance for your business, and here are some reasons why:
1. Protection From Personal and Advertising Injury Liability
This will provide cover for specific non-physical personal injuries like:
- False arrest, detention, or imprisonment;
- Slander or libel;
- Publications that infringe privacy;
- Malicious prosecution;
- Wrongful eviction, entry, or invasion of privacy;
- Trade dress and copyright violations; and
- Copying another’s advertising idea.
However, it’s essential to note that Personal and Advertising Injury coverage can only apply to intentional acts with unintended consequences. For instance, if you come up with a product that turns out to have similar packaging and branding and even contents as another product, you can be sued for trade dress violations.
This cover will cover any such damages that your business will be liable for if claims are brought against it.
2. Protection From Product Liability
If you’re in the business of manufacturing, distribution, wholesaling, or importation, you’ll need this type of cover. It’s not uncommon for products to have:
- Product defects;
- Design flaws; and
- Inadequate instructions, labels, and warnings.
This cover will protect you when a claim is brought against your business for a product made or sold that caused harm to the buyer, user, or a third party. This harm can be classified as personal injury, sickness, or property damage.
3. Protection From Tenant’s Legal Liability:
Suppose you rent space for your office, shop, or warehouse. In that case, the tenant’s legal liability will cover the cost of repair or replacement of damage that your rented space is legally liable for. It could be flooding, fire, or slip and fall accident.
For example, you’ll be liable if; someone walks into your office when the floor is wet, and it causes the person to slip and fall, resulting in injuries. Or one of your employees may drill the wall in your premises and accidentally hit a water pipe which in turn may cause a basement flood or ruin the rented space in one way or the other. Worse still, a fire can start from your premises and spread to neighboring offices, causing damage. If any of these happens, you or your business will be held liable to meet the costs of damages that will arise from such incidents, which may be massive.
But if you’re covered, you’ll be safe.
4. It Builds Credibility In Customers And Employees
Apart from protecting your business from risks, commercial liability insurance will build your customers’ and employees’ confidence in you. They’ll be sure that you’ll take care of them in case of any eventualities. It’ll also show that you take risk management seriously.
5. Contracts May Require Insurance
Some contracts like bank loans, or leases, may require an insurance cover to be considered binding. Commercial liability insurance will provide contractual liability to the extent of bodily injury, property damage, or personal and advertising injury to a third party.
However, you should note that it does not cover breach of contract.
6. For Your Peace Of Mind
Property damage or bodily injuries can happen when least expected. Lawsuits can be very costly, and if you’re not covered, cases can run down your business. You know that you are secured against unforeseen events when you have insurance. Taking up this type of insurance will afford you peace of mind, and you can worry about more important things like growing your business. You’ll also have a considerable measure of financial security.
Conclusion
The amount of commercial liability coverage you need will depend on factors like the level of risk your business carries, the area you operate your business, and the size of your business.
The level of risk associated with your business operations will determine the amount of coverage you’ll be insured for. This will include the type of products you manufacture. For instance, if you’re dealing in the manufacture of chemicals, your perceived risk will be high.
Additionally, if you operate your business in an area regarded as low risk, your premiums will be relatively low. The size of your business, such as the number of employees, will also determine the amount of coverage you’ll need.
